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Germany's private sector warns Merkel against further "burdens"

Germany's leading industry associations urged Chancellor Angela Merkel on Friday to declare a "moratorium on burdens" on the private sector and preserve inheritance tax breaks for family-run firms.

PHOTO: AFP

[BERLIN] Germany's leading industry associations urged Chancellor Angela Merkel on Friday to declare a "moratorium on burdens" on the private sector and preserve inheritance tax breaks for family-run firms.

The BDA employer's association, BDI industry lobby group, DIHK Chamber of Industry and Commerce and ZDH Craftsmen's Association also called on Ms Merkel's governing coalition to boost public spending in infrastructure.

Ms Merkel's government is a coalition of her Christian Democrats and the former opposition Social Democrats (SPD), who insisted on social reforms including a minimum wage and women's quotas on company boards as the price for their support.

Business groups say the reforms create unnecessary red tape.

"What we need now is a moratorium on burdens," the industry associations said in a joint statement.

"The minimum wage is an encroachment on collective bargaining and creates barriers to employment," it said, and keeping the tax breaks was "a central issue for family-run firms." The lobby groups also criticised plans by Finance Minister Wolfgang Schaeuble to introduce inheritance tax for family-run firms, following a ruling by the constitutional court last year that the tax breaks they currently enjoy are illegal.

Mr Schaeuble has suggested introducing a "needs test" for people who inherit or are given 20 million euros' worth of company assets or more, to see if they can pay the inheritance tax. Under the suggestion, up to half of the heir or heiress'assets could be used to pay the levy.

But industry groups say the proposals would threaten jobs and harm companies that are the backbone of Germany's economy.

"Many small suppliers depend on large family-run companies that no longer know whether their business assets will be spared from inheritance tax," the association of family-run firms said in a statement.

Ms Merkel told a news conference in Munich that political talks on the issue would continue and nothing was decided yet.

In addition, the lobby groups urged the government to use the financial leeway from its budget surplus to fix the nation's creaky public transport infrastructure.

Under pressure from European Union partners and the United States to loosen its purse strings, the government said earlier this month it would boost investment spending by some 5 billion euros over the next three years on top of 10 billion previously announced.